Chamber members get the buzz on the cannabis industry

BusinessLink Business Facilitator Dale Schaub speaks to Morinville and District Chamber members on the business of cannabis during their Oct. 3 luncheon. – S Dafoe Photo

by Stephen Dafoe

Precisely two weeks ahead of cannabis legalization in Canada, The Morinville & District Chamber of Commerce invited BusinessLink Business Facilitator Dale Schaub to speak on the topic of “Cannabis-ness.”

Schaub spent the first five minutes of the presentation providing an overview of his organization BusinessLink before talking about the opportunities and regulations surrounding cannabis legalization, and the opportunities to get involved in the cannabis industry from seed to sale.

The business facilitator started the presentation with a quiz on the percentage of people using or willing to try cannabis – 40 per cent, according to Schaub.

The BusinessLink facilitator compared the upcoming private sector opportunities with cannabis to Alberta privatizing the liquor business in 1993.

And like that business model, he expects to see some chains as is the case with liquor sales has now.

“We’re seeing some really big names with a lot of money behind them getting into it,” Schaub said, pointing out that the province has mandated chains can have no more than 15 per cent total retail ownership to prevent monopolies.

From a business perspective, Schaub suggested that the potential customer base would be based on the 22 per cent of Canadians believed to consume cannabis now and the additional 17 per cent who would be willing to try it post legalization. Those numbers were compared to the 80 per cent of Canadians who currently consume alcohol in varying degrees.

All in, the business facilitator sees the cannabis industry as a $22.6 billion minimum, $100 million of that industry expected annually in Edmonton alone.

On legalization day, consumers will be able to buy dry cannabis and oils, with edibles anticipated potentially for July of 2019. Consumers will be allowed to purchase and carry 30 grams of cannabis as of Oct. 17.

Provincially, cannabis will be governed and sold through AGLC with the private sector selling in brick and mortar shops, and the province controlling all online sales.

“If you are opening a retail store, you will be competing with your supplier,” Schaub cautioned, noting that retail stores will have huge restrictions on marketing the product. “Unless you are promoting your products in a cannabis store or are promoting it to a plus 18 crowd, you will not be allowed [to advertise]. The marketing regulations are definitely stricter than liquor.”

Through another quiz, Schaub pointed out the restrictions in naming a cannabis business – nothing suggesting medicinal benefits, nothing that has Alberta in the name, and nothing that appeals to children. As such, Epic Weed Pharmacy, Alberta Cannabis Emporium, and Scooby’s Doobie Doobies, and would all be out.

Schaub said retail pricing is anticipated to be $10 to $12 per gram as AGLC’s distribution price would be $8.90 per gram.

They are wholesale and retail numbers that would provide cannabis retailers with thin margins for their businesses.

“I think potential retailers are a little disappointed on the margins they are receiving,” Schaub said, noting that cannabis retailers may need to rely on other items to up profit margins as gas stations do.

But limited margins are not the only problem facing those who would enter the business, according to Schaub.

The business facilitator said those looking to get funding for their cannabis business have only ATB to turn to, and even then it would be exclusively to fund a building.

Despite Schaub’s assertion, other Canadian banks, including BMO and TD, will consider cannabis operations, and other banks are shifting their viewpoint as legalization looms on the horizon.

Another Cannabis Presentation Later This Month

The Morinville Community Library will be hosting one of their Adult Learning Circle sessions on Oct. 16; the evening before cannabis becomes legal.

The session will focus on the facts behind the changes in cannabis legislation and will include people in the industry. They are hoping to sift through rumour and fears to find out what it will mean to the community.

That session will take place at Higher Grounds Oct. 16 from 6 p.m. to 8 p.m.